Things are looking up in Toronto. There are approximately 150 high-rise buildings under construction in Toronto, more than anywhere else in North America. The Toronto Census Metropolitan Area (CMA) condominium market set several records in 2012 including: construction starts (24,388), active developments (355), total active units (89,251), and total units under construction (56,866) according to Urbanation
, Canada's leading condominium market research company.
In the Toronto CMA there were 17,997 new condominium units sold in 2012, between the five-year CMA average of 20,119 annual sales (2007 to 2011) and the ten-year average of 17,139 annual sales (2002 to 2011), but down from the record breaking pace set in 2011. The active Toronto CMA new condominium market is 79% sold overall, down from 80% sold in Q3-2012 and 82% sold in Q4-2011, but above the ten-year average of 78%.
The average sold index price in the Toronto CMA was $536 psf in Q4-2012 (up 5.2% from Q4-2011), while unsold suites were being offered at $568 psf on average in the fourth quarter.
"Despite concerns over the level of unsold supply in the new condominium market, the ratio of sold to unsold units has consistently been above the long-run average in recent years" says Ben Myers, Urbanation Executive Vice President. "There remains confusion over unsold supply and standing inventory, to clarify, at the end of Q4-2012 there were just 613 completed and unsold new condominium apartment suites in the Toronto CMA - some would be rented out by the developer, some used for construction offices, and others used as model suites for subsequent phases, effectively lowering this standing inventory figure even farther".
Overbuilding was a term cited quite often in relation to the Toronto condominium market in the second half of 2012, however, a survey of developers, lenders and brokers conducted by Urbanation in December indicated that just 11% of respondents indicated that over supply in the new condominium market was their top concern going into 2013.
The resale condominium market suffered from a lack of supply in Q4-2012, as just 3.2% of the 227,700 units (1,285 buildings) tracked by Urbanation were listed for sale in the fourth quarter, the lowest quarterly level in over 10 years. Resale activity declined 14% quarterly in the Toronto CMA to 2,941 transactions. Despite the decline in resale units traded, the Sales-to-Listings ratio increased quarterly to 40.2%, indicative of relatively balanced market conditions.
"Many investors chose to hold and rent their units in 2012 rather than sell them into uncertain market conditions" adds Myers. "This is contrary to the theory that condominium unit holders will panic and sell their suites at significant discounts during a softening market".
Overall, 15,292 resale condominium apartments traded in 2012, down from the five-year average of 15,609, but above the ten-year average of 13,486.
Urbanation is forecasting 14,500 resale condominium transactions in 2013 and 17,000 new condominium sales in the Toronto CMA. 53% of respondents to Urbanation's industry questionnaire expected between 17,500 to 20,000 new condominium sales in 2013, while 42% expected sales between 14,000 and 17,500.